In Texas, insurance companies are afforded protection to treat consumers fairly. This is called an Implied Covenant of Good Faith and Fair Dealing. It has been established by both judge-made and statutory law.
The basis of this doctrine is that you pay a premium for coverage, and the carrier must deliver on promised benefits. Insurance policies run twenty to seventy pages, and more, are mostly concerned with what it will not cover. Courts have ruled that insurance companies will be strictly held to what they say they will cover. Where the language is ambiguous, the policyholder is to be given the benefit of the doubt.
Some of the rules carriers are required to follow are:
- Time limits to acknowledge receipt and respond when you make a claim.
- An obligation to make a fair investigation of a claim
- Time limits to decide to accept or deny a claim.
- If a claim is denied, they are required to let you know why the claim was denied.
- Once accepted, they have an obligation to let you know what payments are to be made and the basis for payment.
- Time limits to make a payment.
In addition to insurance policies, any contract that promises to pay benefits on the occurrence of specific events can carry the same obligations for the issuer as an insurance policy. Examples are car repair, home repair warranties, and moving contracts.
Insurance policies provide two major areas of protection:
- To pay benefits for covered losses (examples: fire, theft, wind-related damage, business interruption).
- To provide a legal defense and indemnification if one is sued for a covered event (examples: auto accident, slip and fall, personal injury, libel and slander, business interference).
The obligation to defend is a very valuable benefit. If you are sued, legal fees can easily run into the tens of thousands of dollars. A carrier may have an obligation to provide a defense even if the precipitating event is eventually found not to be covered by the policy (it’s complicated, that’s why we have lawyers to advocate for you).
If a court finds that a claim was unfairly denied or the carrier did not pay all the benefits the insured was entitled to, a claimant may be able to recover attorney fees in fighting the insurance company.
For any kind of insurance, warranty, or contract that includes payment for damages for specific events, if you feel you are not getting the benefits you paid for, call the Law Office of Elliott Klein for an evaluation of your rights.